page_title: Protectionism
section_title: In the United States
hierarchical_section_title: Protectionism / History / In the United States
caption_attribution_description: English: Average Tariff Rates (France,Uk,Usa).
context_page_description: Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general, and harm the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries protected against.
  There is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade, deregulation, and the reduction of trade barriers has a significantly positive effect on economic growth. Some scholars have implicated protectionism as the cause of some economic crises, most notably the Great Depression.
context_section_description: According to economic historian Douglas Irwin, a common myth about US trade policy is that low tariffs harmed American manufacturers in the early 19th century and then that high tariffs made the United States into a great industrial power in the late 19th century. A review by the Economist of Irwin's 2017 book Clashing over Commerce: A History of US Trade Policy notes:
  Political dynamics would lead people to see a link between tariffs and the economic cycle that was not there. A boom would generate enough revenue for tariffs to fall, and when the bust came pressure would build to raise them again. By the time that happened, the economy would be recovering, giving the impression that tariff cuts caused the crash and the reverse generated the recovery. 'Mr. Irwin' also attempts to debunk the idea that protectionism made America a great industrial power, a notion believed by some to offer lessons for developing countries today. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913, the admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. But American growth during its protectionist period was more to do with its abundant resources and openness to people and ideas.
   According to Irwin, tariffs have serve three primary purposes in the United States: "to raise revenue for the government, to restrict imports and protect domestic producers from foreign competition, and to reach reciprocity agreements that reduce trade barriers." From 1790 to 1860, average tariffs increased from 20 percent to 60 percent before declining again to 20 percent. From 1861 to 1933, which Irwin characterizes as the "restriction period", the average tariffs increased to 50 percent and remained at that level for several decades. From 1934 onwards, which Irwin characterizes as the "reciprocity period", the average tariff declined substantially until it leveled off at 5 percent.
  Economist Paul Bairoch documented that the United States imposed among the highest rates in the world from around the founding of the country until the WWII period, describing the United States as "the mother country and bastion of modern protectionism" since the end of the 18th century and until the post-World War II period. The industrial takeoff of the United States occurred under protectionist policies 1816-1848 and under moderate protectionism 1846–1861, and continued under strict protectionist policies 1861–1945. Between 1824 and the 1940s, the U.S. imposed much higher average tariff rates on manufactured products than did Britain or any other European country, with the exception for a period of time of Spain and Russia. Indeed Alexander Hamilton, the nation's first Secretary of the Treasury, was of the view, as articulated most famously in his "Report on Manufactures," that developing an industrialized economy was impossible without protectionism because import duties are necessary to shelter domestic "infant industries" until they could achieve economies of scale. In the later 1800s, higher tariffs were introduced on the grounds that they were needed to protect American wages and to protect American farmers.
  The Bush administration implemented tariffs on Chinese steel in 2002; according to a 2005 review of existing research on the tariff, all studies found that the tariffs caused more harm than gains to the US economy and employment. The Obama administration implemented tariffs on Chinese tires between 2009 and 2012 as an anti-dumping measure; a 2016 study found that these tariffs had no impact on employment and wages in the US tire industry.
  In 2018, EU Trade Commissioner Cecilia Malmström stated that the US was "playing a dangerous game” in applying tariffs on steel and aluminum imports from most countries, and stated that she saw the Trump administration's decision to do so as both “pure protectionist” and “illegal”.
caption: Tariff Rates (France, UK, US)
exif: {}